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Management and leadership both involve deciding what needs to be done, creating networks of people to accomplish the agenda, and ensuring that the work actually gets done. Their work is complementary, but each system of action goes about the tasks in different ways.

Planning and budgeting versus setting direction. The aim of management is predictability— orderly results. Leadership’s function is to produce change. Setting the direction of that change, therefore, is essential work. There’s nothing mystical about this work, but it is more inductive than planning and budgeting. It involves the search for patterns and relationships. And it doesn’t produce detailed plans; instead, direction-setting results in visions and the overarching strategies for realizing them.

Example: In mature industries, increased competition usually dampens growth. But at American Express, Lou Gerstner bucked this trend, successfully crafting a vision of a dynamic enterprise. The new direction he set wasn’t a mere attention-grabbing scheme—it was the result of asking fundamental questions about market and competitive forces.

Organizing and staffing versus aligning people. Managers look for the right fit between people and jobs. This is essentially a design problem: setting up systems to ensure that plans are implemented precisely and efficiently. Leaders, however, look for the right fit between people and the vision. This is more of a communication problem. It involves getting a large number of people, inside and outside the company, first to believe in an alternative future—and then to take initiative based on that shared vision.

Controlling activities and solving problems versus motivating and inspiring. Management strives to make it easy for people to complete routine jobs day after day. But since high energy is essential to overcoming the barriers to change, leaders attempt to touch people at their deepest levels— by stirring in them a sense of belonging, idealism, and self-esteem.

Example: At Procter & Gamble’s paper products division, Richard Nicolosi underscored the message that “each of us is a leader” by pushing responsibility down to newly formed teams. An entrepreneurial attitude took root, and profits rebounded.

This is an excerpt from HBR’s 10 Must Reads (On Leadership). Get your copy here.